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Gap between rich and poor is the defining issue of our time: Broadbent Institute

on Oct 9, 2012 at 3:34 AM Posted by Gloria Galloway

A year after the Occupy movement set up camps in cities around the world to protest economic disparities, the institute founded by former NDP leader Ed Broadbent has conducted a study that says income inequality is the defining issue of our time.

“Reasonable people can differ over what income and wealth differences are needed to provide incentives and appropriate motivation in a market economy,” said the report released Tuesday. “But extreme economic inequality clearly undermines equal developmental opportunities and individual freedom since unequal economic resources give rise to significant imbalances of power.”

The policy report is the first to be released by the Broadbent Institute which was founded last year to promote social democratic issues across Canada. It is accompanied by a video that features an animated version of Mr. Broadbent, complete with his trademark bushy eyebrows, explaining the problem of income inequality using a black marker on a white board. This study follows on a poll conducted for the institute earlier this year which suggested a majority of Canadians would be willing to pay higher taxes to preserve social programs.

In the new report, Mr. Broadbent calls for economic policies that promote an increase in middle-income jobs, enhanced public support to those with low incomes, expanded public services, and changes to the tax system that would do more to redistribute wealth.

It is a view that is more easily espoused by a left-wing think tank than a party vying for political power. Even New Democrats would have trouble campaigning on a platform of higher taxes.

But, with the resentments that led to Occupy continuing to simmer and with the U.S. presidential election focused so heavily on the merits and moral legitimacy of wealth redistribution, the institute lays out the argument for a more socialist construction of Canadian society.

Pointing to data obtained from Statistics Canada, the study asserts that, between 1982 and 2004, there was no increase in the incomes of the bottom 60 per cent of families, when adjusted for inflation. But, over the same period, the share of taxable income going to the top one per cent of families rose from 7.4 per cent to 11.2 per cent, it says. And the top 1 per cent of all tax filers receive 14 per cent of all income – up from 8 per cent in the early 1980s.

Since the mid-1990s, the study says, the increase in income inequality in Canada has been greater than the average of most advanced industrial countries.

The Broadbent report argues that, when left to their own devices, “markets generate large inequalities of income and wealth which pose a threat to the moral goal of equal life chances.” It says a society based on merit is undercut when extremes of wealth allow the very rich to buy advantage for their children.

And it says that, in situations of extreme inequality, less wealthy consumers try to copy the spending patterns of the affluent, creating unaffordable debt and economic bubbles which burst causing recessions like the one that began in 2008.